LSAT 145 – Section 4 – Question 03

LSAT 145 - Section 4 - Question 03

December 2015

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Question
QuickView		 Type Tags Answer
Choices		 Curve Question
Difficulty		 Psg/Game/S
Difficulty		 Explanation
PT145 S4 Q03
+LR
Resolve reconcile or explain +RRE
Causal Reasoning +CausR
Math +Math
A
1%
156
B
1%
154
C
2%
156
D
1%
157
E
95%
164
125
135
145
 +Easier 148.528 +SubsectionMedium

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Researchers have found that the percentage of people who start new businesses is much higher in countries with high per capita income than in countries with moderate per capita income. This is to be expected since most entrepreneurs in high- and middle-income countries start businesses to take advantage of perceived business opportunities, and there are more such opportunities in high-income countries. Surprisingly, however, the researchers also found that the percentage of people who start businesses is even higher in low-income countries than in high-income ones.

"Surprising" Phenomenon

Why is the percentage of people starting businesses higher in low-income countries than in high-income ones, even though there are more perceived business opportunities in high-income countries, where entrepreneurs often start businesses to take advantage of these opportunities?

Objective

The correct answer will be a hypothesis explaining the difference in motivations for starting a business in high- versus low-income countries. While entrepreneurs in high-income countries often start businesses take advantage of abundant perceived business opportunities, entrepreneurs in low-income countries must have a different motivation.

A
In both high- and low-income countries, well over half of new businesses expect to provide jobs for no more than one or two people.

This does not provide a difference between the reasons for starting a business in high-income countries versus in low-income countries. Instead, it gives us a similarity in the expected job creation of new business in both high- and low-income countries.

B
Many governments of high-income countries provide assistance to individuals who want to start businesses, but very few governments of low-income countries do so.

This adds confusion by suggesting why people in low-income countries would be less likely to start a business, instead of explaining why they are actually more likely to do so than those in high-income countries.

C
The percentage of new businesses that fail within a few years of being founded is generally no higher in low-income countries than in high-income countries.

We need a difference in the reasons for starting a business in low-income versus high-income countries. Instead, (C) gives us a similarity in the failure rates of business in low- and high-income countries.

D
In high-income countries, many entrepreneurs who start businesses to take advantage of perceived business opportunities soon discover that the opportunities were illusory.

Whether the perceived business opportunities in high-income countries are illusory does not explain why the percentage of people starting businesses is higher in low-income countries. We need an alternate reason for starting a business in low-income countries.

E
In low-income countries, most entrepreneurs start businesses because all other employment options are either absent or unsatisfactory.

This explains why more people start businesses in low-income countries than in high-income ones: in low-income countries, entrepreneurs often start businesses due to limited job options, rather than because of abundant business opportunities.

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LSAT PrepTest 145 Explanations

Section 1 - Reading Comprehension

Section 2 - Logical Reasoning

Section 3 - Reading Comprehension

Section 4 - Logical Reasoning

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